BOE Set to Hold Interest Rates as UK Inflation Continues to Rise

The Bank of England is set to maintain its interest rates at 3.75% when it makes its decision on Thursday, despite rising UK inflation.

Most economists expect the Monetary Policy Committee (MPC) to hold rates steady for a sixth consecutive occasion, having remained unchanged since December.

This comes as Consumer Prices Index (CPI) inflation climbed to 3.1% in August, up from 2.9% in July, marking a five-month peak and further drifting away from the Bank of England's 2% target rate.

Experts predict that households will face another increase in their energy bills next month, which could prompt the Bank to lift interest rates in the coming months.

Economists Thomas Pugh and Charlotte O'Leary have different views on what the MPC might do. While Pugh expects inflation to peak at almost 4% in early 2027 before dropping back to 2%, O'Leary believes that the MPC will hold rates for now, but eventually raise them due to mounting inflationary pressures.